The crisis cluttered the beaches with the bones of many survivalist price-cutters and marginal players, both dealers and independents
I am a firm believer that visions of a bright future are injurious to those who see nothing but the troubles of the past. Learn from history … sure. But wallow in it … Why?
This financial crisis cluttered the beaches with the bones of many survivalist price-cutters and marginal players, both dealers and independents. Those that temporarily escaped the volume collapse didn’t survive the savage new rules of financing.
The aftermarket parts and service business has changed so dramatically over the past 10 years that most of the cycles before the “Great Recession” or Pandemic are worth nothing but fodder for remember-the-old-days stories.
Anyone planning to be around for the next five years needs to be able to meld demographics of our workforce with vehicle age curves … consolidation of end users with even more disruptive technologies. Prediction is an ever-tougher game.
Forecast: 2022- Limited Visibility … Cloudy with a Chance of Marginal ROI
A positive outlook doesn’t mean a Pollyanna view of universally easy living right around the corner. Ours is a complicated business — sometimes unnecessarily so.
But here are five precepts upon which you can build a future, defensive planning vision:
• Size alone is not a strategy … nor is a footprint. Geography is falling victim to the virtual availability of product specialization and customer-centric policies and investments. Still, FleetPride is only as effective as its local branches make it.
• Fee follows function … discounts again become discriminate. Suppliers will no longer pay rebates simply on group volume without some proof of marketing effectiveness. Distributors will have to recognize the real value of growing, healthy customers and begin to ignore the insignificant (but historically favored) few.
• Information is the ultimate pop code “A.” As technology deepens, real value can only be created by those who can plumb its secrets. Even tire thumping has given way to RFID solutions. For the independent channel to remain effective, it must upgrade virtually every system. This is NOT hype!
• War declared by OEMs. We’ve been waiting and now it is here. The influence of Japanese, European and even Chinese (and other offshore parts manufacturers) on a tightly controlled vehicle life cycle will cause a real assault on the profits leaking into the independent aftermarket. Can you spell OEM Private Label?
• Net conquers gross. Forget about operating averages and gross sales or profit levels. New analytic programs will force all survivors to be able to connect with both suppliers and customers for no-nonsense discussions on ways to eliminate (not spread or redirect) costs in this channel.
There are other trends which seem likely — suppliers joining ranks to minimize shipping and customer service costs … at the point of export! The internet is about to turbo power access to AI and advanced analytics, creating chaos in the channel that we can’t quite put our collective fingers on just yet.
One of the soundest rules when making forecasts in any field is to recognize that “whatever is to happen is happening already.” To forecast the future, try to understand the present — in excruciating detail.
Perhaps Lou Holtz had it right: “Champions know that success is inevitable; that there is no such thing as failure, only feedback. They know that the best way to forecast the future is to create it.”
Bill Wade started Wade&Partners in 2003 as a consultant specializing in worldwide vehicle parts aftermarket and industrial distribution. Previously, he was CEO of Durakon, FAG/INA Bearings, CR Services/SKF. Wade states that he lives in a barn and has taught the finer points of shark fishing (and cooking) to three children and eight grandchildren. He can be reached at bill.wade@wade-partners.com
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